Stocks ticked downward in afternoon trading Friday, even as the major indexes were poised to record a win for the week as Wall Street digested retail updates and oil's losses amid signals of a slowing economy.
The S&P 500 (^GSPC) edged lower to fall just below the flatline, while the Dow Jones Industrial Average (^DJI) decreased by 0.05% or roughly 16 points. The tech-heavy Nasdaq Composite (^IXIC) fell by 0.1%.
All three US indexes are on track for weekly wins thanks to a roaring midweek rally, which came as the market grew convinced the Federal Reserve could ease back on interest rate hikes. Cooler inflation and softer jobs data were taken as signs the central bank's tightening is finally squeezing the US economy.
Some investors see similar signals in retailer updates. Gap (GPS) gave a bleak forecast for holiday sales in its earnings late Thursday, joining Walmart and Target in warning that a falloff in consumer spending will hit the all-important shopping season.
Oil prices also hinted at a slowdown by sinking into a bear market ahead of the OPEC+ meeting later in November. West Texas Intermediate crude (CL=F) rose 3%, while Brent crude futures (BZ=F) advanced nearly 4% on Friday, but both were still headed for a weekly loss after touching their lowest level in nearly four months.
Meanwhile, Alibaba's (BABA) decision to abandon the spin-off of its cloud unit drew attention to struggles at the Chinese e-commerce giant, whose shares sank in New York to erase more than $20 billion in market value. The decision, which Alibaba said was fueled by Washington's chip curbs, also highlighted that US-China ties are still frayed after a meeting between the country's presidents failed to make a splash.
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Stocks slip in afternoon trading
Stocks wavered in afternoon trading on Friday, with all the major indexes slipping under the flat line, while still clinging to overall gains for the week.
The S&P 500 (^GSPC) edged lower by about 0.03%, while the Dow Jones Industrial Average (^DJI) fell by .05% or roughly 20 points. The tech-heavy Nasdaq Composite (^IXIC) fell by 0.1%.
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Resilience gives way to more discerning consumers
Consumers stayed strong after quarter upon quarter of inflation. But finally, the steadfast swipe-the-card resilience is giving way to discretion. These days, shoppers at big box retailers are moderating their spending, becoming more selective, avoiding big-ticket items, and delaying purchases.
In earnings calls this week, executives sketched portraits of a more discerning American consumer, worn down by higher costs and coping with the anxieties of mounting credit card debt and dwindling savings. Major retailers including Target (TGT), Walmart (WMT), and Home Depot (HD), beat expectations but offered cautious outlooks for the months ahead, as consumers moderate pull back.
Retail sales fell 0.1% in October from the prior month, according to new data from the Commerce Department, notching the first monthly decline since March.
"While it is somewhat encouraging to see that spending did not fall off a cliff in October, the pause is likely a sign of further weakness to come,” said Thomas Simons, an economist at Jefferies, in a research note after the retail sales report.
A weakened consumer can still be strong enough for corporate earnings, especially if companies can beat lowered expectations. But selective shopping and budget stretching can only take the economy so far.
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Business leaders applaud stopgap spending law
President Joe Biden has signed into law a temporary "two-step" solution to Washington’s spending fights and will give Congress and the country a temporary reprieve from shutdown fights at least for the holiday season.
The business community breathed a sigh of relief that a stoppage, and the economic effects that would have come with it, was averted,
reports Yahoo Finance's Ben Werschkul.
Business Roundtable CEO Joshua Bolten offered thanks in a statement to “members of Congress for working together,” while adding that he hoped the cooperation could be repeated next year when the spending debates resume.
The 32-page law sidestepped yet another self-inflicted Washington crisis and averted a government shutdown that, among many other impacts, had threatened to cut off the paychecks of TSA workers just ahead of the busy Thanksgiving travel week. The deal's two steps include funds for some areas of the federal government — places like the Agriculture and Transportation departments — until Jan. 19, 2024. Authorization for the remainder of Washington's bureaucracy is set to expire just two weeks later on Feb. 2.
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Stocks trending in morning trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page during morning trading on Friday:
Applied Materials (AMAT): Shares of one of the largest chipmakers in the US fell more than 4% following a report that the company faces a criminal probe for allegedly violating export restrictions to China. The Justice Department will investigate the company's dealings with China’s biggest chipmaker Semiconductor Manufacturing International Corp. (0981.HK), looking at whether Applied Materials sold hundreds of millions of dollars of equipment without the proper licenses.
Gap (GPS): The clothing retailer surged nearly 30% Friday morning after the retailer reported third quarter earnings that blew away expectations. The strong market reaction comes after a big week of earnings from major retailers including Target (TGT), Walmart (WMT), and Home Depot (HD), which also beat expectations but offered cautious outlooks.
BJ's Wholesale Club (BJ): The warehouse club chain sank 3% Friday after reporting weaker than expected quarterly sales and, like other retailers, forecast slower holiday season traffic.
Alibaba (BABA): Shares slid nearly 3% after the company's listing in Hong Kong saw $20 billion of its market cap evaporate following a decision to no longer spin off its cloud computing business.
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Stocks head for weekly win after mixed open
Stocks were little changed at the start of the trading session Friday, setting Wall Street up for a weekly win, even as the indexes were dipping slightly into the red.
The S&P 500 (^GSPC) edged lower by about 0.04%, while the Dow Jones Industrial Average (^DJI) was just over the flatline. The tech-heavy Nasdaq Composite (^IXIC) fell by 0.1%.
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KStock futures mixed as Wall Street looks to build on gains
Tech stocks stuttered ahead of the bell on Friday but stayed on track for a weekly win alongside the other major US gauges.
Futures on the Dow Jones Industrial Average (^DJI) were up 0.23%, or 81 points, while S&P 500 (^GSPC) futures added 0.18%. Contracts on the tech-heavy Nasdaq 100 (^NDX) fell 0.05%.
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